Coal Tattoo

Some media folks have picked up an on interesting report issued yesterday by the International Energy Agency, telling us:

… Many technologies with great potential for energy and emissions savings are making halting progress at best. Carbon capture and storage (CCS) is not seeing the necessary rates of investment to develop full-scale demonstration projects, and nearly half of new coal-fired power plants are still being built with inefficient technology.

But for my money, there’s a different report that coalfield political leaders across the U.S.  — especially elected officials here in West Virginia, like my good friend Sen. Joe Manchin (above) — should take the time to read. It’s a paper from Daedalus, the journal of the American Academy of Arts and Sciences and it was written by Michael Greenstone of MIT and Adam Looney at the Bookings Institution as part of The Hamilton Project. The paper is called “Paying Too Much for Energy? The True Costs of Our Energy Choices,” and I first saw it referenced on the Washington Post’s Wonkblog, where Ezra Klein  Brad Plumer wrote:

There are two ways to think about the cost of energy. There’s the dollar amount that shows up on our utility bills or at the pump. And then there’s the “social cost” — all the adverse consequences that various energy sources, from coal to nuclear power, end up foisting on the public.

Economists have been working to quantify these social costs for some time: from the premature deaths due to air pollution to the damage wrought by the Deepwater Horizon oil spill in the Gulf Coast. Yet rarely has anyone tried to tally them up in a comprehensive fashion. Which is what makes this new paper from Michael Greenstone and Adam Looney of the Hamilton Project so valuable. The two economists sift through all of these economic papers and try to calculate what the price of various energy sources would actually look like if these external social costs were included.

What did they find? Well, as Klein explained:

The change is especially stark for coal. On market price alone, electricity from existing coal plants is easily America’s cheapest energy source, which explains why coal still provides 45 percent of the country’s electricity. But it’s mainly cheap because coal users don’t have to pay for the downsides: Soot from coal-fired power plants, for instance, still causes thousands of premature deaths each year and hundreds of thousands of illnesses, but those costs are borne by other people, in the former of shorter lives and higher health care bills.

If coal users had to pay these costs out of their own pockets, Greenstone and Looney estimate, the price of burning coal at an existing plant would jump from 3.2 cents per kilowatt hour to 8.8 cents per kilowatt hour. Natural gas looks much cheaper by comparison — in part because it emits half as much carbon-dioxide as coal and considerably less lung-damaging air pollution. And new coal plants would end up being more expensive than even wind or nuclear power.

But what I really liked about the paper was the context, such as this:

Whether by heating our homes in winter, keeping the lights on in our of½ces, powering factories that manufacture goods, or fueling our automobiles, energy drives our economy and supports our quality of life. Thanks in part to an economic infrastructure heavily dependent on energy use–roads and highways, ports and railways, broadband and computer networks, manufacturing plants and shipping facilities–American workers and businesses are among the most productive in the world and the most globally integrated. A century of innovation, fueled by cheap and plentiful energy largely from coal, oil, and natural gas, has allowed the nation to transition from an agriculture-based economy to one based on high-value-added manufacturing and services aided by computerization. Our standard of living–among the highest on earth–would not be possible without energy and the systems that have been developed to harness it.

 And this:

Unfortunately, the sources of energy that we have grown to rely on are more expensive than we once thought. The true cost of energy includes the price we pay at the gas pump or what shows up on the electric bill–known as the “private costs”–and also the less obvious impact of energy use on health, the environment, and national security. Economists refer to these additional damages as negative externalities, or “external costs.” A more holistic accounting of the total costs of energy consumption that includes both the private and external costs is known as the social cost of energy use. Recent events like the Deepwater Horizon oil spill, the death of twenty-nine West Virginia coal miners in the worst mining disaster in twenty-½ve years, and the crisis at Japan’s Fukushima Daiichi Nuclear Power Plant are salient examples of the health and environmental costs, and economic risks, of our current energy sources. While these tragic disasters are the most obvious symbols of these costs, they are by no means the largest.

Or this, which is their conclusion:

A fundamental change in our energy policy will not be easy and will come with costs, with some industries and regions in the U.S. economy being more affected than others. This is because U.S. households and businesses have made decisions based on the expectation of access to energy sources with relatively low private costs. One solution is to offer compensation to those that are harmed. On net, however, the recognition of the full costs of our energy choices would deliver healthier and longer lives, an improved environment, and greater national security.

This isn’t politics. It’s not hot rhetoric. It’s just clear-eyed analysis of the situation we find ourselves in. If any elected officials actually read it, I’ll offer space here on Coal Tattoo for their responses.